When it comes to planning your estate, one of the biggest decisions you’ll face is whether to create a will or a trust. Both serve important roles in ensuring your assets are distributed according to your wishes, but they function in very different ways.
So, which one is right for you? That depends on your goals, your assets, and your family’s needs.
What is a will?
A will is a legal document that states who receives your assets after you pass away. It allows you to:
- Name beneficiaries for your assets
- Appoint a guardian for minor children
- Designate an executor to manage your estate
- Outline funeral or burial wishes (optional)
A will must meet N.C. legal requirements under N.C. Gen. Stat. § 31-3.3 to be valid:
- It must be written and signed by the testator (the person making the will).
- It must be signed by at least two witnesses who are not beneficiaries.
- The testator must be of sound mind and at least 18 years old.
Pros of a will
- Simple and affordable to create
- Allows you to name guardians for children
- Can be easily updated
Cons of a will
- Must go through probate, which can be time-consuming and costly
- Becomes public record
- Provides limited control over asset distribution
What is a trust?
A trust is a legal entity that holds and distributes assets according to your instructions. It allows you to bypass probate, maintain privacy, and control how your assets are managed during and after your lifetime.
The most common type is a revocable living trust, which allows you to:
- Retain control over assets while you’re alive
- Transfer assets to beneficiaries without probate
- Protect assets from incapacity or mismanagement
- Provide for minor children or special needs beneficiaries
Under N.C. Gen. Stat. § 36C-4-401, a trust is legally created when:
- The grantor (creator of the trust) has the intent to establish a trust
- There is property placed in the trust
- The trust has a designated beneficiary
Pros of a trust
- Avoids probate, saving time and legal fees
- Keeps financial matters private
- Can set specific conditions for inheritance distribution.
Cons of a trust
- More expensive to set up
- Requires ongoing management and proper funding
- More complex than a will
When a will is the better choice
A will may be the right choice if:
- You have a simple estate
- You do not own significant assets that would require probate avoidance
- You need to name a guardian for minor children
When a trust is the better choice
A trust may be a better option if:
- You want to avoid probate
- You have significant assets, property, or a business
- You need more control over how and when assets are distributed
- You want to protect assets for minor children or beneficiaries with special needs
Why not have both a will and trust?
Many people benefit from having both a will and a trust. A trust manages your major assets, while a will can:
- Cover any assets not included in the trust
- Name guardians for minor children
- Ensure any personal wishes are legally documented
Final thoughts
Choosing between a will and a trust depends on your specific financial situation and estate planning goals. While a will is simpler and works well for many families, a trust offers privacy and control that can be beneficial in more complex estates.
If you’re unsure which option is best for you, contact Jetton & Meredith today. Our estate planning attorneys can help you create a customized plan to protect your assets and ensure your wishes are followed.